State Exchange Profiles: North Carolina

Final update made on February 12, 2013 (no further updates will be made)

Establishing the Exchange

On November 15, 2012, Governor Beverly Perdue (D) declared the state’s intent to establish a state-federal partnership health insurance exchange.1 However, on February 12, 2013, newly-elected Governor Pat McCrory (R) issued a statement indicating that North Carolina will abandon efforts to establish a partnership exchange and will instead allow the federal government to operate the exchange.2

In 2011, Governor Perdue had signed into law HB 22 which indicated the General Assembly’s intent to establish and operate a state based health insurance exchange.3 Legislators introduced three bills to establish a state-based health insurance exchange in 2011; however, all failed at the close of the legislative session in July 2012.

In the absence of exchange legislation, the North Carolina Department of Insurance (NCDOI), the North Carolina Department of Health and Human Services (NCDHHS), and the North Carolina Institute of Medicine (NCIOM) led exchange planning in the state. As of January 2012, the Department of Insurance leads a Market Reform Technical Advisory Group (TAG) comprised of insurers, agents, consumers, and providers. The NCIOM Health Benefit Exchange and Insurance Oversight Workgroup released a final report in May 2012 on the impact of federal reform on the state.4

Contracting with Plans: In September 2012, the North Carolina Department of Insurance issued a Request for Proposals to solicit work on exchange plan management activities including, technical assistance and training; the Department intends for the contract to begin in October 2012.5 In the spring of 2012, the Department of Insurance’s TAG recommended that North Carolina initially defer to the federal risk adjustment model, but evaluate developing a state model in the future.6The TAG also suggested the state administer the reinsurance program, while deferring the responsibility of collecting contributions to the federal government. In April 2012, the NCIOM Workgroup explored the exchange’s authority to limit the number of plan designs per metal level in 2014.

Consumer Assistance and Outreach: In April 2012, the NCIOM Workgroup identified outstanding issues including, conflict of interest provisions for agents and brokers as well as patient Navigators.7 The Workgroup created a subcommittee to consider the role of Navigators in educating the public and helping them enroll in appropriate coverage.

North Carolina used federal funds to establish a pilot call center that became operational in August 2012. The call center fielded almost 3,000 calls in September and October about various issues, including assistance with enrolling in a health plan and questions about the Affordable Care Act. The call center collects data by county so that concerns can be identified by geographic regions to inform future consumer assistance efforts. The call center hired a Community Resource Manager in October 2012 to work with Navigators and Assisters.

Small Business Health Options Program (SHOP) Exchange: In March 2011, a subcontractor for the Department of Insurance released a report including insurance market analysis of the impact of health reform on enrollment and premiums, the impact of merging the individual and small group health markets, the impact of allowing large groups to participate in the exchange beginning in 2014, and recommended strategies to mitigate adverse selection.8 A year later, the Insurance Department’s TAG recommended that the small group and individual exchange markets maintain separate risk pools and only employers with 50 or fewer employees be allowed participate in the SHOP until the state is required to open the SHOP to employers with 100 or fewer employees in 2016.9

Information Technology (IT): In December 2008, North Carolina hired a contractor to provide a commercial off-the-shelf (COTS) software package that replaced its existing eligibility determination and case management system. The new system, called North Carolina Families Accessing Services Through Technology (NC FAST), currently provides electronic Medicaid/CHIP application, eligibility, and enrollment functionality. North Carolina plans to expand upon the existing system to develop a multiple-service eligibility system to include the Exchange and other public programs.

NCDOI had used federal funding to hire contractors to develop a RFP for all non-eligibility related Exchange systems, including financial management, plan selection functionality, plan management, Navigator/assister management, call center operations, data warehousing, and SHOP eligibility. These services will be required to be interoperable with NC FAST for both Exchange and Medicaid/CHIP functions.10

Essential Health Benefits (EHB): The Affordable Care Act requires that all non-grandfathered individual and small-group plans sold in a state, including those offered through the Exchange, cover certain defined health benefits. States must decide whether to benchmark their EHB plan to one of ten plans operating in the state or default to the largest small-group plan in the state. The Department of Insurance released an analysis of benchmark plan options for the state in May 2012; the report found that all of the state’s options except for the federal employee health benefit plan covered all state mandates, there was relatively little difference in the cost among benchmark plans, and all benchmark options needed to be supplemented for pediatric oral and vision care.11Therefore, the state was comfortable with defaulting to the largest small-group plan, Blue Cross Blue Shield of North Carolina- Blue Options, PPO.

Exchange Funding

In September 2011, the North Carolina Department of Insurance received a federal Exchange Planning grant of $1 million. The Department, working in partnership with the North Carolina Department of Health and Human Services, then received a $12.4 million federal Level One Establishment grant on August 12, 2011. North Carolina will use the grant to engage stakeholders, prepare analyses of outstanding policy decisions, and expand the existing eligibility system of the North Carolina Department of Health and Human Services to accommodate the exchange. In January 2013, North Carolina was awarded a second Level One grant of $74 million to develop an IPA program and support implementation of the HCR Module, including integration of the module with current state IT systems and federal data sources.12

Next Steps

The federal government will assume full responsibility for running a health insurance exchange in North Carolina in 2014.